April 10, 2019
AIT Official Text #: OT-1913
Remarks by David Meale
Deputy Assistant Secretary of State for Trade Policy and Negotiations
Hsieh Nien Fan
Taking Forward Our Enduring Economic Ties
(As Prepared for Delivery)
Thank you, Director Christensen, and thank you to the American Chamber for inviting me here to speak at an event with such a long and esteemed tradition.
President Tsai, and distinguished guests, it is a pleasure to be with you here this evening.
I lived here in Taipei from 2000 to 2004 and am delighted to return to Taiwan 15 years later. The American Institute in Taiwan is a special organization, unique in our system, and a very coveted place to serve. I am fortunate to be among those who have worked there. Further, the Hsieh Nien Fan tradition for the AmCham in Taipei dates back to 1970, meaning that I am joining as you enter into the 50th year of that tradition.
It would be a pleasure to be back at any given time, but it is all the more meaningful to join you as we mark the 40th anniversary of the Taiwan Relations Act. As many of you know, AIT is marking this anniversary with a yearlong campaign called AIT@40. Each month has a designated theme to highlight different areas of U.S.-Taiwan cooperation. I’m very proud to be here during AIT@40 Trade & Investment Month.
As we ponder the anniversary of the TRA, I will take a moment to make a few predictions. First, the relationship between the United States and Taiwan will continue both to prosper and to enhance the prosperity of those who participate in US-Taiwan commercial interaction on both sides of the Pacific. Second, the United States will remain steadfast in all of its commitments to Taiwan, reflecting the enduring nature of our shared interests. Third, Taiwan will continue to grow impressively as a successful democracy and economy. Finally – this is an easy one to get right and very welcome news — AIT will finally move into a new building!
I am delighted to see old friends and acquaintances, particularly President Tsai. Madam President, when I served with AIT, you were the Head of the Mainland Affairs Council, and I frequently joined meetings in your office. I was always struck by your clarity, perceptiveness, and kindness. It is my pleasure to address an event where you are the guest of honor.
My assignment in Taiwan was an extraordinary professional experience for me, but it was also a very rewarding time for my family who still cherishes the memories of their time here. Whether it was hiking with my young children in Yangmingshan, or my wife serving as a docent at the GuGong, or days exploring restaurants that served 三杯雞 sān bēi jī or markets fragrant with smell of 臭豆腐Chòu dòufu… [pause]… okay, I admit it, I was one of those foreigners who never quite got used to that particular dish! Anyway, you can sense my sincerity and my broader point: this is a wonderful place.
I am not here to reminisce, however, but to suggest my past involvement here may help put the present tense into perspective. I can see first-hand the growing prosperity and increased quality of life in Taiwan. In addition, I am struck by how the value of Taiwan as an economic partner has appreciated. Since I departed in 2004, per capita GDP on a purchasing power parity basis has doubled, Taiwan’s ranking on Heritage Foundation’s index of economic freedom has moved from 26th to 10th place, and bilateral trade with the United States has grown 40%. What I am pointing to by rattling off statistics is a simple truth: the basis for being bullish on Taiwan is rooted in long-term and enduring trends. We will certainly continue to tell this positive story far into the future.
As we contemplate Taiwan’s positive trajectory, let me reflect on the idea that Taiwan’s economic success is in everyone’s interest. Obviously, expanded economic activity and prosperity is in the interest of the people of Taiwan. Further, it is in the interest of the United States to have such an important trade and investment partner that is notable both as a democracy and as a well-run economy. As for the rest of the world, let us ponder that an advanced economy like Taiwan is deploying its talent to advance technology and build crucial and secure supply chains that help make international commerce work for all of us.
In that vein, let me make a few comments about the U.S.-Taiwan economic and trade relationship.
As a starting point, we should reflect on how our commercial ties are by any measure quite remarkable. Taiwan is the eleventh-largest trading partner for the United States. If you look at our top ten trading partners and compare them to Taiwan, only Canada and Mexico do more trade with us on a per capita basis.
The United States is Taiwan’s second largest trading partner after China. Of course, as you know, many of Taiwan’s exports to China are actually component parts that go into products that are then shipped to the United States. The nature of our economic interaction is therefore arguably understated by conventional statistics. One recent report, for example, concluded that the United States is actually the largest source of export demand from Taiwan, accounting single-handedly for 29% of orders.
Having established the striking and enduring nature of our economic ties, let me emphasize that the United States will continue to support the positive trajectory of U.S.-Taiwan economic relations. This statement has broader context beyond mutual prosperity. Taiwan is a democratic success story, a reliable partner, and a force for good in the world. As many of you have heard, we are focused in the United States Government on promoting a free and open Indo-Pacific region, and we count ourselves fortunate to have Taiwan as a friend and partner in this regard. By “open,” we mean fair and reciprocal trade, an open investment environment, reliable access to seas and airways, and transparency in agreements that underpin economic activity. As President Trump stated in his National Security Strategy, “Economic Security is National Security.” Flourishing commercial ties underpinned by openness enable our respective economies to deliver what business seeks in order to pursue growth, namely, predictability. Trust that this kind of enabling environment will prove enduring ultimately brings stability and success to the people of the United States and Taiwan.
As I look ahead to how we maintain our momentum, I think in terms of what I would like to call “the four I’s” — interaction, innovation, intellectual property rights protection, and investment.
Interaction… No economy can prosper in isolation, and Taiwan has had to face more challenges of isolation than almost any other market economy. This island’s membership in APEC and the World Trade Organization has helped it to stay active and engaged on the global scene. The United States sees value in economic ties that build prosperity. We also see great potential for the United States and Taiwan to deepen ties with our other partners throughout Asia – and in the spirit of our Indo-Pacific focus, let me note that includes East Asia, Southeast Asia, and South Asia. One example of our support for Taiwan’s regional interaction is our work with Taiwan under the U.S.-Taiwan Global Cooperation and Training Framework. Together, we conduct training programs for experts from throughout the region to assist them with building their own capacities to tackle issues where Taiwan has proven expertise and advantages.
When it comes to Taiwan’s international space, our policy is consistent: In organizations that do not require statehood, we support Taiwan’s full membership. Further, we support Taiwan’s meaningful participation in organizations that do require statehood. Integration does not just have to be through trade pacts and international organizations. Standards are another area where Taiwan can interact more deeply with its commercial partners, including the United States. For example, as 5G develops, the United States is eager to work with Taiwan to make sure that the future of information communications and technology is safe and secure.
Innovation…One of the ways that Taiwan has stayed successful despite the challenges it faces is through innovation. This is not just technical innovation, but also innovation in business models. The entire OEM model that drives our consumer electronics supply chain would just not have been possible without new approaches that came from Taiwan.
Now, if I knew the secret to coming up with a new innovative idea, I would probably not be standing here speaking to you as a government bureaucrat, but instead would be a successful AmCham member listening from the audience. This room is full of good ideas, and Taiwan has done well to listen to the business community. The AmCham White Paper every year is full of ways that Taiwan can be more competitive, and I applaud President Tsai for taking those recommendations so seriously.
Taiwan is full of talented individuals, especially talented women like your president. In this way, Taiwan is a model for the region and that is why we are so excited about next week’s Women’s Economic Empowerment Summit and workshop under the Global Cooperation Training Framework.
Intellectual Property Rights Protection… I have traveled the world throughout my career and among the lessons I have drawn most clearly is the following: respect for ideas means protecting them through a well-formed and enforceable intellectual property rights regime. Economies with a reputation for protecting the assets of those who create value with their minds are economies that prosper, especially in promising areas like services, digital sectors, biotechnology, and high tech design and manufacturing. Taiwan has come far from the days when counterfeit CDs, VCDs, and DVDs were rampant. As is evident from the United States’ approach to trade policy, respect for intellectual property is paramount. In this regard, Taiwan can continue to enhance its “brand” through continued IPR-related efforts and reforms.
For example, consider three areas of IPR focus:
Digital piracy: Tomorrow morning, I will attend a workshop on countering digital piracy. We have brought a delegation of U.S. judges, prosecutors, and investigators to Taiwan to work with your Ministry of Justice, IP Court, and Taiwan’s Intellectual Property Office to exchange ideas on best practices. The event will focus on addressing the challenges in protecting movies, music, books, and software from illegal downloads with no compensation to the rights holders.
Similarly, protecting trade secrets is an area where our efforts with Taiwan are strong. This was evidenced by the cooperation between our Department of Justice, FBI, and your Ministry of Justice on the Fujian Jinhua indictments. Our delegation of judges, prosecutors, and investigators will continue the workshop on Friday with a focus on trade secrets protection.
Finally, I would be remiss if I didn’t mention patent linkage: We have been following closely Taiwan’s amendments to the Pharmaceutical Affairs Act and the pending regulations that would establish a first-class patent linkage system in Taiwan and help Taiwan develop into a biotech hub for the region. I urge Taiwan to follow through with this reform and provide strong protection for innovative drugs.
And of course, the final “I” – Investment… To remain vibrant, every economy needs investment, both foreign and domestic. With strong IP protection, innovative markets, and increased regional interaction, there is no reason that investment will not flow naturally into Taiwan. As the saying goes, 水到渠成 (shuǐ dào qú chéng), when the conditions are ripe, success comes naturally. We have been pleased to see that Taiwan has taken steps to improve the investment environment by approving a couple of high profile private equity deals this past year. Taiwan also has been very successful in seeing returns on its own foreign investment, and we urge Taiwan to continue its active role in the SelectUSA program. The United States is open and welcoming of increased Taiwan investment. This is a two-way street, which supports many jobs in Taiwan and in the United States.
The United States and Taiwan mark 40 years of close cooperation this year, and I look forward to many more years to come. I hope my thoughts this evening offer a sound basis for optimism about the United States’ commitment to Taiwan in general, and for this AmCham audience, the basis for optimism as we take forward and expand our enduring and long-term economic ties.